Kentz shows 10% hike in first-half profits on flat turnover

KENTZ, the Clonmel-based international engineering company, has reported a 10% increase in first-half profits on turnover that was flat over the period.

The group employs 10,700 worldwide providing engineering services to major construction and oil industry projects mainly in the Middle East and Australasia.

For the six months to the end of June 2009 pre-tax profits rose to $18.5 million (€12.6m) from $16.8m, while turnover was more or less unchanged at $328.8m (€225m).

In a tough market the group said it has built up a book of back orders that have grown 38% since the end of the year, on the back of a significant pick-up in business in Australia where Chevron and others are developing major onshore gas fields to supply demand in China and other developing economies.

Kentz secured a telecommunications contract worth $87m from Chevron Australia for the Gorgon project in Western Australia.

Australia has been targeted by Chevron and other major energy groups for development because the Australian authorities has given full control of the day to day operations of oil and gas fields gas discoveries to the developers.

Chief executive Hugh O’Donnell said the outlook is positive for projects in the onshore oil and gas sector across a number of regions.

Kentz Corp shares fell the most in 11 months in London trading after reporting a 15% slump in cash in the first half. Kentz dropped 10.5p, or 5.2%, to 192p in London, the steepest one-day decline since October 16.

In Qatar the group has secured a $200m deal with Shell, one of its other major customers, which is developing a $20 billion oil and gas projected called the Pearl in that state.

O’Donnell said the group was lucky to be involved in some of the “largest resource projects in the world” that will continue underpin group performance in the period ahead.

At the end of the first half it had cash reserves of $166m, sufficient to fund its current list of projects without having to go to the e-market “in the near terms for funding”, he said.